Canada jumped six spots in this year’s ranking of top destinations for clean energy investment by S&P Global Commodity Insights, placing 14th out of 37 nations in 2023.
Ottawa’s latest budget boosted the outlook for Canada as new investment tax credits helped counter last year’s massive clean spending package from Washington, according to Timothy Stephure, S&P’s director of global power and renewables.
The United States scored highest in this year’s S&P Global's Renewable Market Attractiveness Rankings. The analysis looked at 18 individually-weighted factors including policy framework, supply-demand fundamentals, size, competition, and friendliness to investors. Germany ranked second, followed by China, Japan, and France.
Stephure says 2023 thus far has been a “landmark year” for clean energy. Canada has been no exception. The country has seen a pair of multi-billion incentive deals between the federal and Ontario governments, and automakers Volkswagen AG (VWAGY) and Stellantis (STLA), to build battery factories in Ontario. According to multiple news reports, Swedish lithium-ion battery producer Northvolt is also planning to build a multibillion-dollar factory in Quebec.
When the 2023 federal budget was released in March, Canadian Climate Institute president Rick Smith called it “the most consequential budget in recent history for accelerating clean growth,” praising its “decisive steps to ensure Canada won’t fall behind in the global race to net zero.” However, a report in July from Clean Prosperity and The Transition Accelerator noted the suite of incentives are a “bankable gap” weaker than those in the U.S.
“The new investment tax credits were a huge step forward that signal perhaps Canada is ready to enter into a new stage of faster renewables growth,” Stephure told Yahoo Finance Canada in an email.
So, what kept Canada from joining S&P’s “most attractive” club this year? Stephure says it boils down to uncertainty.
“Canada traditionally suffers from a bit of a disconnect between its longer-term goals for clean energy and targeted policies that drive tangible investments,” he wrote.
Experts who spoke to Yahoo Finance Canada in June pushed for a national strategy to transition the economy to cleaner fuel sources, pointing to tensions with fossil fuel-rich Alberta as a hurdle.
Stephure says Alberta’s recent decision to pause large wind and solar projects as it reviews potential clean-up costs and impacts to farmland suggests its leaders “may be more comfortable with a longer path to reach its net-zero goals.”